The Reserve Bank of India (RBI), on Tuesday, allowed holding companies or core investment companies (CICs) to raise funds through external commercial borrowings (ECB) for project use in special purpose vehicles (SPVs) involved in infrastructure sector.
The ECB proceeds would be utilized either for fresh capital expenditure (capex) or for refinancing of existing rupee loans availed of from the domestic banking system for capex.
However, the RBI said that an earlier stipulation that maximum 25 per cent of ECB raised by the infrastructure companies can be utilised for refinancing of the rupee loans availed from the domestic banking system (40 per cent in case of power sector) would remain unchanged.
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The ECB for SPV can be raised up to 3 years after the commercial operations date of the SPV and the SPV should give an undertaking that no other method of funding will be utilized for that portion of fresh capital expenditure financed through ECB proceeds.